A growing number of management and reward practitioners have recently unrelentingly expressed their concern over the effectiveness of financial bonuses, insofar as strongly recommending employers to review their reward practices so as to completely efface these from their total reward systems. Bonuses are depicted as the evil of reward and their maintenance and new introduction into reward systems as a drama of Shakespearean proportions.

The global financial crisis arisen in 2008-2009 accounted for bonuses attracting the media and public interest, and consequently widespread criticism, in that suspected of having actually played an active role in triggering the global financial crisis. Bonuses received thus a very bad press, severely tarnishing their reputation, which has ever since been virtually impossible to restore.

The quality and effectiveness of everything, notwithstanding, depends upon the use individuals made of what is available to them. Medicines, for instance, are developed to heal people but their excessive or wrong use can ultimately cause lethal consequences to individuals. It is in general hardly believable that things may produce just one type of outcome: good or bad. Every item and service is developed to attain a specific objective and serve a specific cause, but their practical success and effectiveness essentially depends on their use. Change management, corporate culture, reward practices and every other policy and practice introduced by employers into their organizations aim at producing a specific effect; which is not in reality invariably attained. Whether the introduction of new practices ends in a dismal failure this is habitually due to their inappropriate use or execution. Bonus schemes make no exception, they are introduced by employers to reward the contribution made by their employees to organizational success; whether managers misuse them, nonetheless, employers not only seriously risk not obtaining the intended results but, what is worse, producing counterproductive, undesirable effects.

It is not sheer coincidence that bonuses dire troubles come from the banking and financial sector, where the implementation of a combination of very poor reward practices and weak risk control systems has for years essentially prevailed. The problem was not indeed represented by bonuses of their own, but rather by the mechanism bonus schemes were operated. Bankers received their bonuses before the result obtained by their transactions was known, cash bonuses, rather than afterwards, deferred bonuses. The significance of bonuses was embedded in literally any financial sector company’s corporate culture (bonus culture) and bonuses shortly become the only means used by the employers of this sector to attract and retain talented professionals.

The banking sector does not indeed represents the only case of bonus schemes misuse. Some multinational companies have in fact worked hard to add insult to injury, implementing practices essentially rewarding their CEOs and Directors for failure, offering them staggering amount of money, in the form of lump sums, despite the disastrous effects their management activity has produced.